Global Crossing Gets US Foothold

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Global Crossing Gets US Foothold

Fiber-optic provider Global Crossing said Wednesday it agreed to buy telephone carrier Frontier for US$62 a share, or $11.2 billion in stock, giving it a foothold in the US market.

The deal puts a 40 percent premium on Rochester, New York-based Frontier's shares (FRO), which closed up $2.31 at $44.50 Tuesday on the New York Stock Exchange. Frontier has about 171.61 million shares outstanding.

The marriage of Bermuda-based telecommunications upstart Global Crossing (GBLX) to the local and long-distance carrier will create a company with a market value of $30 billion.

The telecommunications industry has been consolidating in recent months as companies seek out partners in the age of advanced communications networks.

Global Crossing chief executive Robert Annunziata, who came from AT&T, will run the new company. Frontier chief executive Joseph Clayton will become a vice chairman.

The acquisition "will enable us to greatly accelerate our aggressive growth strategy," Annunziata said in a statement.

"These are two complementary companies with no overlap, and together we will be ideally positioned to meet the exploding demand for bandwidth to handle Internet, data, video, and voice transmissions," Annunziata said.

Global Crossing is building advanced fiber-optic networks to challenge the established telecommunications firms around the world. Most undersea cables are owned and operated by consortiums of state-owned phone companies and huge multinational firms, like AT&T.

The monopoly control of underwater communications routes has hamstrung efforts by competitive carriers to break into the global services business. But Global Crossing, like rival undersea cable outfit Project Oxygen, intends to own and operate its cables.

After acquiring Frontier, Global Crossing will have 71,000 route miles – over 1 million fiber miles – and offer ultra-high bandwidth to 159 cities in 20 countries. It will also offer global voice, Web hosting, private line, ATM, and Internet services.

In late February, Frontier had said it was exploring a range of options as it restructured, including the spin off its local phone operations in Rochester and concentrating on long-distance services, and selling the company.